Internet is changing from being a “parallel world” where some people access to a place where a huge part of the world’s population spends their time.
The global internet penetration climbed to 18% which means that from a total population of 6,574,666,417, there are 1,173,109,925 people that access to internet. If we consider that North America was the pioneer and its penetration is almost 70% we could infer that in the near future the global penetration trends to reach those levels.
The new scenario seems to be very promising to all the online players. But how will this new scenario affect the Web Analytics situation?
The answer is in the following chart:
Web Analytics Beta: The focus was completely on technology, and the main goal was keeping everything running. The information was measured mainly for technologic proposes.
Web Analytics 1.0: Companies are provided with tons of information. Web Stats tools turned into Web Analytics tools and provide you with hundreds of metrics and reports. Something similar happens with Ad-Servers, E-mailing tools and Surveys software.
Companies have all the information they could measure. The big problem is not measuring it anymore, but analyzing it. Since all that information is stored in isolated databases (some of which does not count with an API) and with heterogeneous information.
While in offline marketing measuring the information represents the highest cost (capture the information) in online marketing companies must spend a lot of money on integrating and analyzing the information.
I would like to point out that time and money is not as bad as not having the chance of analyzing your online actions as what it is, a system instead of isolated group of things working independently.
1- Information Centric: In Analytics 1.0 the focus is on tools. Every tool gives you a certain amount and type of information, so depending on what information you need you should go to different tools or data bases and analyze it independently.
Analytics 2.0 the information is in the center as we can see in the following image:
2- 360 View: In order to have a total picture of a project’s situation you should know the What (Behavioral), the Why (Attitudinal), the When (Temporal) and the Where (Environmental).
3- Make Sense: The information has two core objectives, controlling and making decisions. If we don’t provide people with relevant information that really make sense they can not control or make efficient decisions. Every project is unique, and even when some counts are comparable, it’s important to center the attention on defining which information makes more sense.
4- Systemic Vision: Every company is a System, which means a set of entities, real or abstract, comprising a whole where each component interacts with or is related to at least one other component and they all serve a common objective (Wikipedia). So it’s necessary to manage it as a system, considering that every action we make will affect the entire system and not only the part had we directly modified with the action.
5- Integrated strategy: The entire Analytics plan should be based on the corporative strategy and provide it the information structure for controlling and decision making.
6- TOC: It makes no sense trying to solve all your organizational problems at the same time because every System has one key constraint which limits the performance relative to its goal. Focusing on that key constraint you could not only use your budget more effectively, but also decrease the risk of making multiple decisions that could affect negatively your System. The key steps in implementing an effective TOC approach are (Eliyahu M. Goldratt):
a) Identify the constraint (the thing that prevents the organization from obtaining more of the goal)
b) Decide how to exploit the constraint (make sure the constraint is doing things that the constraint uniquely does, and not doing things that it should not do)
c) Subordinate all other processes to above decision (align all other processes to the decision made above)
d) Elevate the constraint (if required, permanently increase capacity of the constraint; “buy more”)
e) If, as a result of these steps, the constraint has moved, return to Step 1. Don’t let inertia become the constraint.
7- ROCI: Switch from Return on Investment to Return on Customer investment. Carry on data mining actions over your customer database with focus on carry on tailored actions that allow you increase the LTV of every particular client, generating better corporative results.
Analytics 2.0 Working Plan
The Analytics 2.0 process has two main work flows:
Strategic Definition (Top-Down)
A top-down approach which aligns the measurement strategy with the business strategy. This process start by analyzing the Company Corporative Strategy and designing the information structure from which all the information will be measured, process, analyzed and reported.
Analytics Dynamic Process (Bottom-up)
This approach from the bottom-up focuses on providing every area of the company with fresh and relevant information for controlling and decision making processes.
The following pyramid is a graphic representation of the above mentioned model:
information starts very operative at the base of the pyramid and becomes more strategic to the top of it.
Internet information: Is the resulting information from the interactions between your project and the “Internet”. Those interactions could be tracked or not.
Information: Is the tracked (measured) information represented by counts. This is the most operative and less strategic information.
Indicators: Resulting normally from dividing at least two counts. Indicators gives people from the operative level support for their decisions.
KPI: The Key Performance Indicators represents the most strategic information in the operational level (Online Actions). Helps Mid and High level managers understanding how is the company going and what are going to be the next steps even when they are not in the business details. This type of information explains itself.
KSI: The Key Strategic Indicators are directly related with the Corporative Strategy. Help Top Managers following up different business units without having to pay attention in details.
Every top-down cycle means also a learning cycle as we can see in the following chart: